October 16, 2024 – Interest rates remain about the same – Forbes Advisor

Current money market interest rates

Currently, the highest money market rate is 5.00%, compared to a national average rate of 0.59%.

Here are the current interest rates for money market accounts:

• Average APR: 0.59%
• Highest rate: 5.00%

Source: Curinos. Data is as of October 15, 2024. Prices are based on a minimum deposit amount of $10,000.

What are money market interest rates?

Money market interest rates are the interest rates you earn on your balance in a money market account. Interest rates on money market accounts are variable, meaning they can change at any time, and are calculated as a percentage of your balance. Money market accounts often have tiered interest rates, with larger balances earning the best interest rates.

The interest rate on a money market account is how much money you earn on your balance, and the annual percentage yield (APY) is how much you earn on your balance, plus compound interest, over the course of a year. Compound interest is the interest you receive on the interest that is credited back to your account.

How does a money market account work?

A money market account (MMA) is a type of interest-bearing deposit account offered by banks and credit unions. MMAs at banks are insured by the FDIC, while MMAs at credit unions are insured by the NCUA. In both cases, depositors are protected up to $250,000 per account type, so your money is protected in the event of a bank failure. Money market accounts work like other savings accounts in that you freely deposit money and earn interest on your balance. You can withdraw funds at any time, but you may be limited to six transactions per billing cycle.

Money market accounts typically pay higher interest rates than other deposit accounts, including traditional savings accounts. And unlike typical savings accounts, they typically offer debit cards, check-writing ability, or both, providing convenient access to cash. Money market accounts often have higher deposit and balance requirements than many bank accounts.

How to open a money market account

Before you open a money market account, consider at least a few options at different banks. Compare minimum balance requirements, monthly fees, withdrawal limits and APYs to choose the best solution. Don’t forget to also check the conditions to get the highest interest rates.

Typically, you can apply for a money market account online or in person. You must provide personal information such as your name, employment status and income, address, and social security number, and provide government-issued identification. Once you receive approval, you can make your first deposit.

Money market account vs. savings account

Money market accounts function like savings accounts in some ways and checking accounts in others. Similar to savings accounts, money market accounts allow you to deposit money as you wish and earn interest on your savings. Both are highly liquid and secure deposit accounts that may apply withdrawal limits, balance requirements and monthly fees.

Similar to checking accounts and unlike most savings accounts, money market accounts can come with debit cards, checks, or both. This makes them a little more flexible than the typical savings account, but money market accounts can limit transactions and are not intended for everyday use. Money market accounts also typically have higher fees, deposit and balance requirements.

Is a money market account worth it?

A money market account is worth it if you have the funds to meet deposit and balance requirements and you don’t have to pay a lot of fees. If you need easy access to your money but want to save it for now, money market accounts are a low-risk option for earning interest. They are also FDIC or NCUA insured.

If you can’t meet the minimum balance requirements to get the best interest rates, or if a money market account has fees that eat into your earnings, it may not be worth it. Consider other savings options if you want lower minimums, or check interest checking accounts if you need unlimited access to your cash.